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Blockchain: under lock & key?It’s not a question of if but when this new technology will start to transform law fi rms, so the time to prepare is now, says Jeffrey Catanzaro

Jeffrey Catanzaro is vice-president of the legal business solutions team at UnitedLex (www.unitedlex.com).

TECHNOLOGY 15 February 2019 | www.newlawjournal.co.ukPROFESSION20

Blockchain has the power to revolutionise so many sectors in so many ways, and it is likely we will continue to read more and more about

this technology and its practical applications in 2019.

For example, blockchain is being used to track the provenance of food, to ensure it is what it says on the label: the technology can prove an onion has been grown organically, or that a piece of fi sh used in your sushi is sustainable. In the fi nancial world, blockchain has the potential to be a gamechanger by creating more secure transactions, and it also forms the basis for cryptocurrencies. The music industry is using blockchain to stamp out illegal downloads and ensure artists are properly compensated. The automotive sector is utilising the platform to manage supply chains and track vehicles. You get the picture: blockchain can transform most sectors and infi ltrate everyone’s lives, creating more secure and traceable transactions and value chains. So how is this so-called new industrial revolution impacting the legal sector? And are law fi rms alive to the potential of this new technology?

Sea change on the horizonFirst, let’s consider how blockchain can be utilised in the legal sector.

Smart contracts are an obvious application: using blockchain to automate the process of drawing up and agreeing a contract creates cost and time e� ciencies. Smart contracts can also be designed to automatically trigger a penalty or payment if a certain point in the agreement is activated—eliminating mountains of paperwork for lawyers. Blockchain can help eradicate fraud in areas such as insurance claims and land ownership. Similarly, adoption of the technology can ensure the validity of wills, helping to eliminate disputes over inheritance and ensure intellectual property records are accurate and accessible.

technology as other law fi rms means you are not gaining a competitive edge. Many well-established legal IT platforms simply track work such as contracts, but the latest innovations in this area take this a step forward by introducing greater levels of automation and machine-driven conceptual interpretation.

Of course, there is risk involved in investing in the very latest technology: it’s unproven, and could su� er from a lack of engagement. It is certainly a balancing act, and many law fi rms are approaching an interesting time when they will need to make a decision about the sort of blockchain technology that is right for them, and which can stand the test of time while o� ering clients an e� ective service.

Many fi rms fail when they consider these technological investments on a project-by-project basis. I have found that greater buy-in can be generated across the fi rm if the whole IT strategy is considered—because this creates an outline against which all future decisions can be judged.

Once a way forward is agreed, it is essential for the fi rm to invest in educating its lawyers on how to use this new technology. Blockchain platforms or artifi cial intelligence are only as e� ective as their users, and failure to engage with this new technology will render it useless. Similarly, communication is very important: these technologies are designed to be all-encompassing, and it is important that a fi rm’s various departments and practice teams are working together to ensure the platforms are properly integrated for internal and external use.

It’s not a question of if, but when blockchain will start to transform law fi rms, and teams should be preparing now to harness this technology. NLJ

“ Blockchain platforms or artifi cial intelligence is only as e� ective as its user”

Many law fi rms use the Cloud these days to store data securely and where it is easily accessible. Blockchain could one day also replace this sort of technology, although we are a way o� from this happening. It’s often helpful to have a third party in charge of data to step in if there are any issues. Decentralising this service might cause more problems than it solves.

However, the benefi ts of blockchain for the legal sector are numerous: the technology can boost e� ciency and productivity, while improving transparency and helping to prevent fraud. Nonetheless, we are still in the relative early days of blockchain and the legal profession is not known for its rapid adaptation to change; most law fi rm management teams are aware there is a sea change on the horizon related to how technology is utilised in the sector, but many may be unsure how best to proceed.

The slowness of law fi rms to adapt to change can sometimes result from their hierarchical structure. The decision to utilise blockchain may understandably feel overwhelming to a fi rm which lacks the necessary technological knowledge. Of course, the technology is constantly evolving, and there is also a risk that partner discomfort at signing o� a signifi cant investment in this area means the technology will have moved on, and the investment is then defunct. Similarly, playing safe and investing in the same